A Note From Paige
I can’t believe it’s March already. Spring is almost upon us! If you’ve been hibernating all winter, you should consider sprucing up your business policies or estate plan as part of your spring cleaning. Contact the firm’s Director of Client Services, Kimberly Zwaagstra, at firstname.lastname@example.org to schedule an appointment.
On March 10, I'll be giving a presentation about estate planning at the BNI Decatur Chapter meeting. BNI provides networking opportunities for professionals across many disciplines and industries. We give members the opportunity to share ideas, contacts, and referrals. Contact me for more information about the event.
(Image courtesy of Vichaya Kiatying-Angsulee at FreeDigitalPhotos.net)
Give A Little Bit: Charitable Donations and Estate Planning
Is there a cause that you’re passionate about? Do you perform service work in your community or advocate on behalf of an issue that’s important to you?
Participating in your community or in charitable organizations may play a significant role in your life, so this month, I’m going to describe two ways that you can make contributions to your favorite organization using your estate planning documents in order to leave a lasting legacy.
I can think of several reasons why someone might want to include a charitable contribution in their estate plan:
- You have a history or good memories associated with the organization. Some people might donate to an alma mater, to an organization where they worked regularly with family or friends, or to a group they helped found.
- You agree with an organization’s mission statement. If you’re passionate about a particular cause, you could set aside a donation to help that organization further its cause. For example, if your favorite pet came from a rescue shelter, you could donate to that shelter or to another animal-related organization.
- You don’t have family members you’d want to give money to. If you don’t have children or aren’t close with extended family members, you may prefer to leave your estate to your favorite charity.
- You have family members, but they don’t need your money. Bill Gates is one of several wealthy people who has opted to donate sizable portions of his net worth to charity rather than leave it all to his children. If your extended family members or children will be well-off without an additional inheritance, you may opt to donate those funds instead to a charitable cause.
How Do I Donate?
Let’s look at two ways. One way is by directly providing a testamentary gift in your will or trust document. The second way is by naming the organization as a beneficiary on a retirement account or life insurance policy.
1. Direct Gift
The first, and possibly easiest, way to leave a charitable contribution is to designate the amount as a gift in your will or trust. I can help you designate these gifts in your estate planning documents. These gifts should be treated like any other provisions. In that regard, I recommend you review and update them periodically. You should also consider talking to your executor, trustee, and, possibly, the other beneficiaries to explain your reasoning for the donation and why it’s important that those wishes be carried out.
2. Beneficiary Designation
The second way to make a contribution is by naming your charity of choice as a beneficiary on an account such as your retirement or life insurance account. If you don’t want to donate all the proceeds of the account to charity, several options exist for making split-interest gifts, mostly involving different types of trusts. For example, you could set up a trust in which proceeds of the account would pass to one beneficiary, and the remainder would pass to the other after a set period of time has passed. In this example, the charity could be either the first or the second beneficiary.
Regardless of the arrangement you choose, remember that beneficiary designations on retirement and life insurance policies need to be updated separately, so make sure you request the forms when it's time to update your beneficiaries.
Including a charitable donation in your estate plan is a great way to honor an organization or support a cause that has made a positive impact on your life. By giving to an organization, you can set a lasting example for your family about the importance of compassion and helping others.
I can help you figure out the best way to incorporate a donation into your estate plan using the flexible options available. Contact me to schedule a consultation.